SIOUX CITY, Iowa (KTIV) -
The saga that's developed between Sioux City and one of its developers has started to play out like a movie, but it's not exactly a blockbuster.
In fact, the latest bankruptcy battle has the bank taking cash out of city coffers.
Twelve-years ago, Sioux City set their sights on turning Historic 4th Street into an entertainment district. It signed a lease agreement with California-Based Civic Partners. The city was so confident in the 15-million dollar project they guaranteed it.
"Civic Partners is a well seasoned company," said Former Economic Development Director Patty Heagel at the time.
Current council member Tom Padgett was part of the council that signed the dotted line.
"I don't think anybody on this current council will vote for that today," said Heagle.
The reason is that Civic Partners went belly-up, and now Sioux City is paying up.
"I don't think there's anybody here that's particularly happy about having to make this vote," said Mayor Bob Scott.
Sioux City backed two loans Civic Partners took out for the project: one for $750,000, to pay for camera equipment and furniture, the other for 4 million. The first came from Liberty National Bank. When they foreclosed on Civic Partners, the bank took the money, $500,000, out of Sioux City's account. Monday night, the council agreed to let the bank keep it.
"We really don't have much choice, legally," said Padgett.
The family-run movie theater that sits inside the building, operated independently of Civic Partners, has been a show stopper since day one. In fact, the property taxes it's generated were used to cover the half million dollars the bank took out of city coffers.
"It's not additional tax dollars that we'll have to ask for in the future. That doesn't make it any better," said Scott.
Depending on what a bankruptcy judge decides, city taxpayers could be on the hook for more money.
"The total amount is around $5.6 million potential total out of pocket expenses. That would be on the high-end," explained City Attorney Nicole Jensen-Harris.
"We still have the opportunity to pursue that money from the owners," said Mayor Pro Tem John Fitch.
The theater's owner wants to buy their part of the lease from Civic Partners, but right now, they're stuck on the sidelines, waiting for the bankruptcy court's decision, and the City and Civic Partners to iron out their differences.
"It's a frustrating spot for us to be in. It's a distraction," said Main Street Theaters Owner Bill Barstow.
He's got some ideas to fill the 15,000 square feet of retail space that largely sits empty.
"Imagine how cool it would be to add more pieces to that puzzle in the 4th Street district," Barstow added.
However, they're ideas he's not ready to project.
Jensen-Harris expects a resolution in the next 18-months.
Assistant City Manager and Finance Director, Bob Padmore, says the Civic Partners Project is the only one in his tenure that included a guarantee from the city.
